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Where should you invest in real estate? If you do your research well enough, and have enough experience investing in real estate, you can make money. Smart investors cherry pick areas by making sure the location is profitable. Does it pass "The Test?"

1. Is the population growing fast? Check the US Census reports, or ask the local government if they have the statistics. Invest in areas with huge population growth.

2. Is there job growth decent? Again, ask local government for statistics. You want to see job growth equal to or exceeding population growth. Job growth signifies people's ability to pay for housing--and higher rents for it.

3. Decent quality of life? This is subjective, but nonetheless important. Are there theaters, coffee shops and malls. Lots of malls usually means the location has money to spend. Trendy areas typically have increasing demand for housing. It is also a good indication of a high quality-of-life. You don't want to invest in the ghettos, do you? Of course not.

4. Wealth in the area? Similar to the last question but more specific towards income. Break down the numbers on what the household incomes are in the area.

5. How much new construction? If there are new stores, or other developments going on, that is a strong indication that the area is flooded with money. Someone is pumping money into the local economy.

6. How many homes for sale? A lower supply of homes for sale usually means an upward trend on prices. Though there are exceptions. And with this it indirectly drives up rents as well, which makes for profitable investing.

7. Rent and vacancy levels? High vacancy can mean a lot of things but it is sure sign that the area is NOT a place to invest in. Invest in an area with low vacancy. And with rents, is the rental rates in the area fit the criteria for big cash. Cheap areas that cost only $400 to rent a unit is good for a renter but NOT for an investor. Look for areas with higher numbers because it equates to more cash for real estate investors.

Did your area pass "The Test?" If not, move on. If so, start looking for some investment deals.